We know about philanthropy, where very rich people give away vast amounts of money for social good, and we also know about capitalism; defined by The Dictionary of Human Geography as “a historically specific form of economic and social organization […] a class system, that labour and capital were central to its operations, and that capitalism as a system was expansive, dynamic and unstable.” But what exactly is philanthrocapitalism? A relatively recent idea not even recognised by the spell-checker on my computer? Well, yes, but it describes the combination of business-related methods of success with philanthropy.

This has come about since the ‘golden age of capitalism’, when the number and value of the super-rich rapidly increased. Most philanthropists, like their forefathers Andrew Carnegie and J.D. Rockefeller, made their fortunes through business and entrepreneurship. The two key players in this shift from philanthropy to philanthrocapitalism were the then two wealthiest men on the planet, Bill Gates and Warren Buffett, who work closely to apply their profit-making business know-how to charitable giving. Much of their work is done through the Bill and Melinda Gates Foundation which aims to end poverty and eradicate disease, while in the US improving the state-funded school system. To encourage more of the wealthy to donate to charitable causes they established the Giving Pledge in 2010, whereby at least half a person’s wealth must be given away during their life or in a will. According to an article by The Guardian in 2015 they had 138 subscribers.

There are many advantages to this style of ‘doing development’ – not least of which because it redistributes some of the surplus money held by the richest and uses it for the good of the poorest (or that’s the idea, anyway). Philanthrocapitalists use their experience in business by transferring their money-making strategies, language and ethics to the giving sector. Being some of the world’s richest individuals, philanthrocapitalists also have the risk capital required to pilot new initiatives before they are rolled out large-scale. (Bishop, M. & Green, M., 2008)

An example of philanthropy improving development in a specific way is explained in The Influence of Elite Philanthropy on NGO Development in China by Guosheng Deng. Deng emphasises the involvement of China’s wealthy in aiding the rapid development of Chinese NGOs by bringing autonomy to the previously government controlled NGO sector, as well as their influence over the “sustainability and social impact of the NGO sector as a whole”.

Of course there are other successful methods of development, so we must consider the disadvantages of philanthrocapitalism to see the whole picture. There is the obvious problem that only a very small proportion of the global population are ‘very rich’. Although the majority of us are excluded from partaking in philanthrocapitalism directly, we could get involved with such foundations and campaigns by working or volunteering with them, or donating what we can.

Conversely, philanthrocapitalism involves some of the wealthiest and most influential people on the planet in ‘doing good’, who then encourage their rich and famous friends to join in, thus creating a small group able to make a big difference. Another recently emerging term linked to philanthropy is ‘celanthropy’, on which I could write a whole other post. Essentially, it describes the rise in celebrity involvement in development. Examples include Emma Watson and Angelina Jolie (actresses and UN Goodwill Ambassadors) and Bob Geldof (part of Band Aid in 1984). I include this point because celebrities can expand the audience of campaigns and encourage those who would not normally think about development to get involved.

The video below challenged my opinion of philanthropy, arguing that philanthropists should treat employees better during their professional lives (even if that means reducing profits) rather than giving money towards art galleries or other niceties in retirement. Although not directly about giving or development, it makes a good point that if problems are avoided in the first instance they won’t need fixing later on.

Another limitation of philanthrocapitalism is mentioned in Philanthrocapitalism by Matthew Bishop and Michael Green, a book which really guided this post. It is the notion that philanthrocapitalists cannot solve the world’s problems alone; Warren Buffett is quoted saying he has only given enough for “one dollar each per year for the poorest half of the world population”, and Gates adds “given the scale of the problems […] we will only be a small part of the solution.”

There is so much work to be done that the world needs a range of development methods to cooperate, including NGOs, ODA, foreign investment and philanthrocapitalism. I do believe that the growing number of very rich globally should enable a new age of development opportunity.

Sources:

Bishop, Matthew, and Michael Green. Philanthrocapitalism : How the Rich Can save the World and Why We Should Let Them. London: A. & C. Black, 2008.